Arcep publishes its annual report and delivers a progress report on its strategic roadmap

For Arcep, 2016 was a year of regulatory and legislative changes that had a direct impact on the scope of its responsibilities and its obligations. Arcep was entrusted with newfound investigatory and sanctioning powers last year. To adapt to this new environment and the introduction of European open internet rules, the Digital Republic Act, the Independent Authorities Act (AAI) and the Montagne Act, Arcep's annual report now contains three separate volumes.

An annual report in three volumes: three facets of Arcep's actions

In accordance with the Independent Authorities Act (Loi sur les Autorités administratives indépendantes, AAI) adopted in January 2017, Volume 1 "Arcep and regulated markets" provides and update on Arcep's responsibilities, and the actions and decisions carried out in 2016. Another novelty: this report must now provide details on Arcep's European and international activities which, since the Authority's creation, have contributed to the building of Europe and the promotion of French telecoms regulation.

The Independent Authorities Act also requests that the regulator provide a progress report on fixed and mobile network rollouts. Volume 2 "Regulation for smart regions" is a response to this obligation. Devoted to Arcep's actions in support of regional connectivity, it is the new version of the document that was previously entitled "GRACO proceedings". This document was published in January during the plenary conference attended by Arcep, elected officials, local authority representatives and operators.

Volume 3, "State of the internet in France", complies with European open internet regulation which requires Arcep, and all national regulatory authorities, to publish an annual report on their audits of net neutrality and their findings. This report also complies with the obligation set out in the Independent Authorities Act for Arcep to include "issues relating to neutrality and the use of IPv6 technologies" in its annual report.

Arcep 360°: 2016, from words to deeds

In January 2016, Arcep delivered the conclusions of its strategic review in the form of a roadmap that identified the four pillars of its actions, three new forms of regulation and twelve priorities going forward. 2016 was therefore the year when this roadmap and Arcep's State-platform approach were put to the test.

Arcep's 2016 milestones on the four pillars identified in its strategic roadmap

1. Investment in infrastructure

• Telconomics press conference: explaining new regulatory priorities

On 30 June 2016, Arcep unveiled its pro-investment doctrine and corresponding regulatory actions at a press conference attended by financial reporters and analysts. At the heart of this doctrine: creating a virtuous circle, leveraging competition to incentivise operators to invest in infrastructure and bolstering their ability to monetise those investments.

• Mobile network sharing: the end of roaming and a framework for network sharing

The "Macron" Act gave Arcep the power to request operators amend their earlier mobile network sharing agreements. In May 2016, Arcep published its guidelines on the implementation of this newfound power with respect to regional development and infrastructure-based competition objectives, and the creation of fair and effective competition for the benefit of users. In return, in June 2016, Arcep received two amendments that plan for the extinguishing of roaming measures:

Amendment signed by Orange and Free Mobile on 15 June 2016 planning for the gradual end to Free's 2G/3G roaming on the Orange network, from January 2017 up to 2020. ?

Amendment signed on 15 June 2016 by SFR and Bouygues planning for the gradual end to SFR roaming on the Bouygues Telecom 4G network by the end of 2018.

• €8.9 billion invested in 2016: a record high

2016 was also marked by a record high in operators' investment in their fixed and mobile infrastructure. Despite which France still lingers in lowest rankings according to an index published by the European Commission in 2017 (ranked 24th in the European Union for operators' 4G coverage, and 26th in fixed superfast network rollouts).

2. Smart regions

The 2016 edition of the GRACO discussion forum between Arcep, local authorities, concerned administrations and operators focused on the role that regulation plays in furthering the emergence of smart regions (smart cities, smart villages). The challenge for Arcep: to ensure that connectivity is such that it enables innovation in the regions, to maintain an open and level playing field and to give all emerging technologies a chance.

• Mobile coverage maps: a heavy dose of transparency

The Arcep Decision of 6 December 2016 requires every operator to publish new coverage maps that clearly distinguish those areas with very good coverage, good coverage, limited coverage and no coverage for mobile calling and SMS services. Thanks to these new enhanced maps, Arcep hopes to deliver a "heavy dose of transparency",and so allow users to choose their operator no longer based solely on price but also on network performance.

• La Poste in the regions: assessing the cost of the public service mandate

To fulfil its regional development mandate, the La Poste network comprises 17,000 access points. Were it not for this specific obligation, La Poste would have deployed around 7,600 access points. Arcep estimated the net cost of fulfilling this mandate at €238 million in 2016. The resulting partial compensation paid to La Poste was maintained at €170 million for the period running from 2014 to 2016.

3. Open internet

• Arcep and BEREC, the Body of European Regulators for Electronic Communications

Arcep's involvement in BEREC found its concrete manifestation with the adoption on 30 August 2016 of NRA guidelines for enforcing of European regulation on open internet access. In the run-up to the guidelines' publication, BEREC received a record 500,000 contributions to its consultation on the topic! The Chairman of Arcep was the BEREC Vice-Chair in 2016, in charge of Roaming (and is this year's Chair).

• New investigatory and sanctioning powers, to enforce net neutrality

The Digital Republic Act introduces the principle of net neutrality into French law, and gives Arcep investigatory and sanctioning powers to enforce compliance. This newfound responsibility puts Arcep in a position to fully carry out its mandate of guarantor of net neutrality.

4. A pro-innovation prism

• The Internet of Things: a White Paper with other State administrations, and a conference on "inventing pro-innovation regulation"

On 7 November 2016, Arcep published a White Paper on preparing for the Internet of Things revolution. It contained two documents: a map of the core issues and challenges, and guidelines for inventing pro-innovation regulation. Arcep worked in tandem with ANFR, ANSSI, CNIL, DGALN, DGE, and France Stratégie on its investigation into the matter. The White Paper was presented at a conference in November 2016 entitled: "The Internet of Things: inventing pro-innovation regulation", whose participants included the European Commission.

• Regulatory Sandbox: a special legal framework for start-ups and trials

The Digital Republic Act sets out a framework for the experimental use of frequencies and numbers for telecoms trials. Arcep now has the power, under certain conditions, to relax operators' obligations temporarily, for a maximum of two years, to help them develop a technically or commercially innovative technology or service. This regulatory sandbox mechanism is the first of its kind in France.

Arcep 2016 milestones on three new forms of regulatory intervention identified in the strategic roadmap:

1. Building data-driven regulation

On 30 June 2016 at Cap Digital, Arcep delivered a six-month progress report on its strategic roadmap, and detailed the core tenets of its data-drive regulation approach, designed to flesh out its traditional regulatory toolkit. That same day, it issued a call for partnerships to players capable of providing crowdsourcing solutions for measuring fixed and mobile coverage and quality of service, user reporting of market malfunctions and the dissemination of information to users.

2. Constructing regulation together

In 2016, Arcep pursued and amplified its partnership initiatives: establishing new alliances with RATP to monitor mobile network deployments on the underground rail network in the Ile-de-France region, with other State administrations to produce a White Paper on the Internet of Things, and with CPME and MEDEF to produce a guide for SMEs on "Choosing the right fixed and mobile telecoms solutions".

3. Serving as a neutral expert in digital and postal affairs

Arcep was consulted by the French Parliament on its bills, draft decrees and regulations that pertained to postal services and the telecoms sector, and participated in their implementation. Moreover, in accordance with the Law of 20 January 2017, Arcep can now request advice from or be asked to advise any administrative or independent public authority on matters that fall under its purview. The "Macron" Act also introduced the possibility for the Government to request Arcep's opinion on all matters that fall under its purview. At the behest of Axelle Lemaire, Secretary of State for Digital Affairs, Arcep submitted a report to the Government on the deployment of IPv6 in France, and created a scorecard for tracking it. In 2016, Arcep adopted a total of 33 opinions.

Spotlight on three decisions adopted as part of sanctions procedures, handed down in 2016 by the competent Arcep bodies:

•Business market and access to civil engineering infrastructures: an investigation launched in October 2015 revealed that the Orange retail branch did not employ the same processes and ordering interfaces as alternative operators when deploying optical fibre solutions for businesses. In a decision dated 20 July 2016, the Arcep body responsible for investigations and settling disputes issued Orange an official order to meet its non-discrimination and transparency obligations with respect to the civil engineering infrastructures used to connect business customers.

•Rollout delays in the "town centre white area" programme": on 28 July 2016, Orange and SFR were fined for failing to meet the deadlines set in their official orders to provide 2G coverage in town centres across France. The operators were given fines in the amount of €27,000 for Orange and €380,000 for SFR.

•Financing the universal service: in a decision dated 14 April 2016, the Arcep body responsible for investigations and settling disputes fined Lycamobile €100,000 for failing to meet its universal service financing obligations. It was the first ever fine relating to universal service that the Arcep body imposed on an operator.

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